From the moment you step out the door, you’re reminded that the price of everything has gone up this year. Food. Gasoline. Rent. Utilities. You name it, we're paying more for it— services included.

So what about legal fees? Many of us routinely raise our fees in January, but given the increasing cost of living and everything else that's going on, is it the right time?

This week’s tip is to feel confident about raising your rates.

When raising your rates, what matters is that you're upfront about the reasons for the increase and that you ensure your new rates still align with your client's perception of value.

Remember that clients determine value, and your work only ads value if it meets three criteria:

•  It moves the matter forward
•  Your client wants it and is willing to pay for it, and
•  You do it right the first time

While you may move matters forward and get work done right the first time, if clients aren’t willing to pay, you’ll have difficulty landing new clients and maintaining profits.

Even with existing clients who are familiar with your work, it’s important to meet the value criteria or you risk losing them after a rate increase.

So your action item this week is to review your rate increase communication and decide if your new rates still pass the value test.

This brings me back to an article published on Attorney at Work about 3 years ago that’s still relevant even today. It offers advice for communicating an increase to your clients in a way that's clear and accurate.

When communicating your new increased pricing, here’s what to keep in mind:

•  Describe the value-based reasons for the fee increase:

If clients are paying more, then it’s only natural that they want to know how they stand to benefit. Explain the value-based reasons for the increase. This includes measures such as adding more staff to serve clients better or investing in new technology to streamline the client experience.

•  Be honest about increases in your own overhead.

You're not immune to the inflation we're all suffering. It’s ok to let clients know about increases to your overhead and how thathas impacted your decision to raise your fees.

Clients appreciate transparency. They are more likely to accept the increase once they understand where their money is going and how they stand to benefit. 

Read the full article for even more tips on how to explain an increase in your rates.

Join us for next week’s Tip of the Week as we share more on building a profitable and productive law practice.